Investing in disruptors within India's BFSI sector: Perspectives from Sagar Agarwal of Beams Fintech Fund.

The fintech and financial services sector in India has seen significant growth in recent years and holds vast potential for future development. Contributing nearly one-third of the country's GDP and boasting a market cap of $1.3 trillion, the sector has been bolstered by innovative fintech products and favorable policies, making India one of the fastest-growing financial services markets globally. This environment presents substantial investment opportunities, which Sagar Agarvwal, Co-founder and Managing Partner of Beams Fintech Fund, aims to explore.Sagar Agarvwal (SA): Many people underestimate the size of the fintech and financial services industry. Currently, the BFSI sector contributes one-third of India's GDP, with Bank NIFTY comprising 35% of the Index. The sector grows at a rate 1.5 times faster than the GDP and leads in IPOs, mergers and acquisitions, and secondary sales in India. Globally, most unicorns are in the BFSI sector, and we expect India to have 75 fintech and financial services unicorns in the next three years and 150 by 2030. UPI handles $2 trillion in annual payments, transforming traditional banking, while GST payments exceed $250 billion, accounting for 6% of the GDP. India also has $2 trillion in bank deposits, $1 trillion in gold reserves, and borrows $2-3 trillion annually. Given the sector's significant contribution and projected growth over the next decade, we believe it offers unparalleled opportunities for substantial outcomes as an investment fund. In India's competitive financial services sector, with over 9,000 companies, how does Beams select investments that can become category leaders?

SA: Despite the competitiveness, the sector is large enough for many companies to succeed and grow. India has 31 private banks, over 1,500 public sector, regional, cooperative banks and societies, over 400 major non-banking financial companies (NBFCs), and more than 5,000 other non-lending businesses, each targeting specific segments and regions. Only 200 companies are currently listed publicly, presenting a significant opportunity for future market leaders. We look for opportunities both horizontally and vertically within each segment. Our primary focus is on three categories within BFSI: BFSI SaaS, financial services (especially lending), and tech (non-lending businesses), which we have further divided into 30 subcategories. Our investment approach is similar to public market investing, combining top-down and bottom-up analysis to assess profit potential and sustainability in each subcategory.